When I debug this, it doesn't get past creating folder "two". No exception logged, no nothing. Also, when I run this without debugging (Ctrl + F5), same result, only dir "one/two" gets created in the local storage.

Is causing your app to deadlock. This is why you're seeing the "hanging" behavior. It is peculiar that you seem to be seeing folder 1 & 2 being created, as i assume this should deadlock when the first await is executed.